Commission wants bigger budget for smaller EU

European Commission President Jean-Claude Juncker and EU Commissioner for Budget Gunther Oettinger at the start of the plenary session on the EU's next long-term budget | Emmanuel Dunand/AFP via Getty Images

European Commission President Jean-Claude Juncker and EU Commissioner for Budget Gunther Oettinger at the start of the plenary session on the EU's next long-term budget | Emmanuel Dunand/AFP via Getty Images

That is the political math of the European Commission's proposal on Wednesday for a roughly €1.279 trillion spending plan for 2021 to 2027.

The proposal, unveiled in the European Parliament by Commission President Jean-Claude Juncker and Budget Commissioner Günther Oettinger, will pose an even greater test of unity for the EU27 than the tense negotiations with the U.K. over its departure.

In squeezing and pushing not only to fill the roughly €13 billion annual hole that will be left by Brexit, but also to ramp up spending on new priorities, the Commission has set forth an initial list of winners and losers who will spend the next two years or more fighting bitterly to shape the final outcome.

The budget plan risks deepening some of the EU's most serious fault lines, especially between net payers and net recipients, and between the East and West.

For the wealthier northerners, most vocally the thrifty Dutch, Brussels is stretching the post-Brexit checkbook too far. The Eastern Europeans -- the Hungarians and Poles above all -- won’t take kindly to the barely concealed plans to punish them over alleged backsliding on democracy. The southerners will like the extra funding for border control to handle the migration crisis. Big Pharma will like increased spending on research. Farmers won’t be happy to see their subsidies go down.

Ultimately, the decision lies with the 27 leaders on the European Council, who in traditional fashion are expected to eventually negotiate through the night, with an array of last-minute buy-offs, compromises and concessions needed to secure a unanimous vote.

The financial blueprint unveiled by the Commission, called the Multiannual Financial Framework (MFF), smashes through the previous budget cap of 1 percent of the bloc's gross national income (GNI), and seeks to push overall spending to 1.114 percent — even as the bloc loses Britain's sizeable net contribution to EU coffers.

"The new budget framework ... will decide the future of our Europe of 27 and will determine our legacy to forthcoming generations," Juncker said. "The level of the budget is not without consequence. It is directly linked to our ambitions."

Juncker insisted that the Commission has exercised restraint, by rigorously reviewing all existing programs for cuts and not simply putting forward the entire EU's wish list, which he said would have been rejected out of hand by all 27 EU countries and most members of the European Parliament.

"We propose an ambitious but balanced budget, one that is fair for all," he said, adding: "We want to present a proposal that is taken seriously, and a proposal that can represent a basis for future negotiations."

Farms and regions face cuts

Oettinger said the cuts would amount to a 5 percent chop to the EU's Common Agricultural Policy, which currently makes up nearly 40 percent of the bloc's budget, and a 7 percent reduction in regional funds, which overall now account for one-third of spending by the EU.

In pushing for an MFF totaling 1.114 percent of GNI, Oettinger is trying to strike a delicate balance — demonstrating the Commission's big aspirations by breaking through the old 1 percent cap and allocating funds for an array of new priorities like migration, security and defense, but also showing restraint by not overreaching in a way that could have prompted budget hawks to accuse him of profligate excess and to dismiss his plan as fantasy.

Still, the budget plan, which must be approved unanimously by all 27 leaders on the European Council, risks deepening some of the EU's most serious fault lines, especially between net payers and net recipients, and between the East and West.

The proposal ups the ante in Brussels' running battle with Poland and Hungary over democratic standards by seeking to create a new "conditionality" mechanism that would empower the Commission to cut off funds to nations deemed not to be respecting the rule of law.

The plan also risks provoking fury from entrenched agricultural interests — the biggest beneficiaries of EU spending — by cutting direct subsidies to farmers. It adds enormous political pressure on leaders of the net-payer countries who will have to convince their taxpayers to support sending more money to Brussels, which is never popular.

Some leaders started hammering the plan even before Juncker spoke to Parliament.

“The EU Commission’s proposal for a new EU budget contains some positive approaches for modernization," said Austrian Chancellor Sebastian Kurz, whose country is a net contributor. "But it is still far from an acceptable solution. Our goal must be for the EU after Brexit to be slimmer, more economical and more efficient.”

Oettinger noted that even amid cuts, the Commission is intent on ramping up spending in certain priority areas, including a doubling of financing for the Erasmus+ educational exchange initiative, and a sharp increase in funds for research and development.

"With these new own resources, we believe that we can fill the Brexit gap to the tune of 50 percent" — Günther Oettinger

As part of the MFF process, the Commission must also develop a new Own Resource Decision, laying out the sources and amounts of EU revenue.

In what will certainly be among the most controversial points in the debate, Oettinger said the Commission wants to create several new sources of income, including a redirection to the EU of revenues from selling carbon pollution permits under the bloc's emissions trading system, and a new tax on nonrecyclable plastics. National capitals historically have been extremely reluctant to cede taxation authority to Brussels.

Oettinger said the new revenue was needed to help close the hole from Brexit. "With these new own resources, we believe that we can fill the Brexit gap to the tune of 50 percent," he said.

Oettinger insisted the spending level of 1.114 of GNI is reasonable, and that the cuts were prudent. "No program is being damaged," he said, adding "we are pushing new investments in the future of the European Union at the same time."

This article is part of POLITICO’s new coverage of the EU budget, tracking the development of the seven-year Multiannual Financial Framework, and the first EU budget that will face a low or no contribution from the United Kingdom. This coverage includes the Budget Briefing newsletter every Monday afternoon. Email pro@politico.eu to request a complimentary trial.

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Yellow Submarine

“With today’s proposal we have put forward a pragmatic plan for how to do more with less” – “The economic wind in our sails gives us some breathing space”

Presumably he refers to less countries rather than less money, given the 10% increase in the budget. If you extract UK contributions from original EU budget then the new budget increase, for the remaining nations, is more than 20% 😉

And there is now reducing wind, and revenue, in the sails. Latest EU area gdp numbers are down to 0.4% from 0.7% last quarter, its slowest pace in 18 months, raising concerns about the impact of trade restrictions (brexit), a stronger currency and capacity constraints on the region’s longer term prospects.

Brussels desperately needs to sort a decent trade deal with UK, and stop inventing problems, before the whole shooting match disappears down the pan.

Posted on 5/2/18 | 2:44 PM CET

John Brown

“Commission wants bigger budget for smaller EU”

I thought the EU was expanding further with Albania and Macedonia to join shortly followed by Bosnia, Kosovo, Montenegro, Serbia and Ukraine ?

Posted on 5/2/18 | 3:22 PM CET

Mike

“a bigger budget for a smaller EU” and, at the same time, “how to do more with less”.
This must be EPSO logic.

Posted on 5/2/18 | 3:34 PM CET

Yellow Submarine

As Brussels chiefs count the cost of life without the UK, EU nations will be obliged to fill the £13bn Brexit sized hole by raising their contributions to around 1.1 per cent of gross national income of member states, a rise on the current 1 per cent commitments. Which Mr Juncker described as “reasonable”. 🙂

Mr Juncker said that the Brexit budget blackhole was actually €15 billion, higher than the previous €12 billion stated by European budget commissioner Guenther Oettinger.

Posted on 5/2/18 | 3:39 PM CET

Donal O'Brien

Att Comment

Commission wants Bigger Budget for smaller EU
I have never heard a Politician from any Country in the EU or Outside asking for Less

Not part if there DNA

Will take time with opinion on Enlarged Budget

Cheers for Brexit
Allways
Donal O’Brien

Ps
Was going to make Comment on the two Rogues ln the Photographer
Let it lie for another day

Posted on 5/2/18 | 4:11 PM CET

Stiv Ocssor

Germany are effectively going to end up bankrolling the EU project.

Posted on 5/2/18 | 4:27 PM CET

maciek maciek

No taxation authority to Brussels’ neo-commies. No discretional authority to them.
Brussels’ leftards were already allowed to take to much power and they are destroying our Europe.

Posted on 5/2/18 | 4:35 PM CET

peter lintner

More money and powers for unelected eurocrats to build a totalitarian Euro-Paradise, aka EUSSR.

Posted on 5/2/18 | 4:56 PM CET

Yellow Submarine

Germany’s finance and foreign ministers called on Wednesday for fair burden-sharing between European Union member states in the 2021-27 budget period.

“The proposal of the EU Commission would considerably increase the additional burden on Germany,” they added.

“Even with an EU budget of 1% of gross national income, not the 1.1% announced today, Germany would have to pay an average of up to 10 billion euros per year more from 2021 onwards.”- to fill the funding gap left by Britain’s exit next year.

EU doublestandards

That's right

The EU should progressively increase the share of own resources, eventually making them the lion share of the total resources.

To all brits (especially brexiteers) what are you doing here? None of your concern.

Posted on 5/2/18 | 5:53 PM CET

glasspix 1

Throughought the ongoing illegal migrant crisis we have learnt that it is never enough for the spoilt condescending EU commissioners, they will not stop at the boundaries of common sense and that of the common good. They have proved themselves to be an organised group of anti-democratic political extremists and must be resisted anew during the budget discussions. No more powers or finances should be passed into their hands, nothing good has come of it since Juncker and his lackies are at the helm.

Posted on 5/2/18 | 6:12 PM CET

Ghost of JB

@That’s right

“The EU should progressively increase the share of own resources, eventually making them the lion share of the total resources.”

Posted on 5/2/18 | 6:26 PM CET

Ghost of JB

This is where protectionism pays – if you are the EU commission. The commission has no “own resources”, it’s just an inocuous sounding term for customs duties, of which the collecting member state gets 20% and the EU gets the other 80%.

So, as far as the commission is concerned, more borders = more money!

Posted on 5/2/18 | 6:33 PM CET

Klaus Wekx

I hear the EU have now opened a PayPal account and are now begging for donations.

Posted on 5/2/18 | 7:10 PM CET

Sean .

But why does the EU require increased funding when some of the “naughty” countries (probably all net recipient countries) are going to get their funding cut?

Posted on 5/2/18 | 7:51 PM CET

Tony Brown

I think that all eu citizens ought to show their solidarity by paying a 1 percent income tax directly to the commission. I just wish I could show my devotion to the union by contributing as well, but unfortunately as a Brit I won’t be a citizen any more.

Posted on 5/3/18 | 12:29 AM CET

F Bloggs

And here’s Juncker’s State of the Union Speech last year which is the cord directive of the new budget as it says in paragraph 2: “The Commission’s proposal aligns the Union’s budget to our political priorities – as reflected in the positive agenda set out by President Jean-Claude Juncker in his State of the Union address on 14 September 2016 and agreed by the EU27 Leaders in Bratislava on 16 September 2016 and in the Rome Declaration of 25 March 2017.”:http://europa.eu/rapid/press-release_SPEECH-17-3165_en.htm

Posted on 5/3/18 | 12:44 AM CET

Dan Lozano

In the US, Merkel has become the laughing stock of the EU.

Posted on 5/3/18 | 4:39 AM CET

Priscilla du Bleu

@That’s right

Good morning, mate, nice to see you back. Moderation here has improved significantly, brekkie intelligence has not.

“To all brits (especially brexiteers) what are you doing here? None of your concern.”

They

1. either daydream that that EU will collapse without the UK,
2. know bluddy well that brexit never will happen, hence they will remain 😀 part of the future budgets, or
3. ‘solve’ the EU’s problems in order to explain why they are incapable of solving their own ones …. no intellectual capacities left for their own country.

Posted on 5/3/18 | 7:54 AM CET

Priscilla du Bleu

@Klaus Wekx
“I hear the EU have now opened a PayPal account and are now begging for donations.”

Only those voices in your head you hear day in, day out …. learn to live with them and follow their orders when they tell you to re-register for primary school.

Posted on 5/3/18 | 7:56 AM CET

Priscilla du Bleu

@Sean .
“But why does the EU require increased funding when some of the “naughty” countries (probably all net recipient countries) are going to get their funding cut?”

They need to erect a wall across the channels in order to keep out of the EU those perky brekkies who will try and seek asylumn after their country breaks down :-D. And of course all the champaign one sips while watching brekkieland being flushed down the economical crapper.

Posted on 5/3/18 | 7:58 AM CET

EU doublestandards

@Cilla and all his/her(its?) wageslave manservants

“And of course all the champaign one sips while watching brekkieland being flushed down the economical crapper.”

Only you, you stuck up snob.

Posted on 5/3/18 | 8:52 AM CET

Bob Rob

The “border management” part of the proposed budget is one i disagree with. This is not a European task but one that individual member states should fulfill its a way they can escape their responsibilities under the Schengen treaty. To secure ones non-Schengen border is the cornerstone of being allowed into the Schengen zone. Hungary btw seems to have secured its border much more cost effectively something others should emulate. Also border security risks the EU coming into conflict with states that have disputed borders without having the ability to then enforce borders. It is a disaster waiting to happen.

Posted on 5/3/18 | 9:32 AM CET

Priscilla du Bleu

@EU doublestandards
“Only you, you stuck up snob.”

Wrong, my love, all of EUrope is going to party when brekkieland flushes itself down the crapper. Because it saves them further waste of time and money because other members understand that whilst the club may have its flaws, it is by far the better solution than joining brekkieland in going south.

😀

Posted on 5/3/18 | 9:48 AM CET

Donal O'Brien

Att Comment

Have you lost my submission?
It was up

Cheers for Brexit
Allways
Donal O’Brien

Posted on 5/3/18 | 11:48 AM CET

Henk Crop

After Brexit there is just 13 billion less money available.
Phrases like: ” the opportunity to shape our future as a new, ambitious Union of 27” makes me step on the brakes. For the Netherlands it just means more money going out and more immigrants coming in. Suggestion: Analyse the Institutions with zero-base budgeting. If you cannot meet the available resources present thoroughly motivated requests to the donor Members.

Posted on 5/3/18 | 2:24 PM CET

Henk Crop

I also have a specific proposal to help meeting an acceptable budget.

Mr. Juncker wrote in his State of the Union Address 2017 that he will be proposing 25 new initiatives a year, that is down from 100 in the previous years.
Since the EU Commission employs ca. 33,000 people. That suggests that a saving could be made of 25,000 employees.

Posted on 5/3/18 | 2:53 PM CET

Henk Crop

@ Bob Bob. I fully agree with your point on border management. The individual countries should protect their own part of the EU outside border, like they have always done. It worked in the past. That many more people are attempting to immigrate to the EU is because of these stupid immigration laws they made in Brussels, which give false hopes. It are the Brussel regulators who made the Human trafficking and the deadly voyages develop. So Brussels should produce better laws and help border countries deport the illegal immigrants. We do not need a big Coast Guard, like some in Brussels dream of. Just a few boats in reserve. Brussel needs to do some coordination.
Just ask yourself what a EU Coast Guard would cost. All these officials with big, tax free, salaries. In Brussel managers at great distance from reality. It would mean another EU failure.

Posted on 5/3/18 | 9:44 PM CET

Klaus Wekx

In order to pay for itself, Germany renaigned on its commitments to NATO. Learn from us: Do not pay your obligations, the Americans and our allies will rescue you and pay for your defense. Use your money for yourself and sponge from the goodwill of others.

Be like a bunch of Germans, be a bunch of backstabbing KuntZ.

Posted on 5/4/18 | 12:29 AM CET

Irene Duym

“Smaller” by one member. Hold your horses, Politico.

Posted on 5/6/18 | 4:59 PM CET

Irene Duym

@Mike
A problem with EPSO? Application rejected?

Posted on 5/6/18 | 5:03 PM CET

blue bell

It looks as though there is push back from Germany against the Commission plans for a European Finance Minister.
“BERLIN (Reuters) 6 May 2018 – Leading politicians from Chancellor Angela Merkel’s conservatives want to pass a resolution at a meeting this week to reject any pooling of debts in Europe and any fiscal policy without national parliamentary controls, Handelsblatt reported.

The daily business newspaper, citing sources from the conservative bloc’s parliamentary leadership, said the senior politicians also oppose European Commission plans for a European finance minister.

The group includes the parliamentary leaders of the conservative bloc in the Bundestag, the European Parliament as well as from Germany’s 16 states, Handelsblatt reported.

Merkel will join them on Monday for a meeting in Frankfurt.

The report highlights the resistance among Merkel’s conservatives to any euro zone reforms that could see more German taxpayers’ money being used to fund other member states.

The conservatives are nervous about European Union reform after bleeding support to the anti-euro Alternative for Germany (AfD) party at national elections last September.

Last month, Merkel called for a spirit of compromise on reforming the euro zone at a meeting with French President Emmanuel Macron, who pressed for solidarity among members of the currency union.”

Posted on 5/7/18 | 2:07 AM CET

Henrik Ørsted

CAP and Regional Funding should be uncoonditionally scrapped.

Posted on 7/10/18 | 3:58 PM CET

Ioul Knep

Unfortunately Mr. Oettinger is not the right person to do this job.

Posted on 7/11/18 | 10:25 PM CET

Antoine uk

Solve the Irish problem and the trade deal will be easy…just as easy as Liam Fox said a long time ago. But first let’s take care of our Irish neighbour instead of pretending it is a fake problem (Theresa and many others acknowledges it is a real problem). This requires facing DUP.

Posted on 8/15/18 | 6:25 PM CET

Antoine uk

It’s all about rhetoric: Germany and Holland are the biggest beneficiary of the EU and the biggest complainers….they know how to get what they want…

“Dan Lozano
In the US, Merkel has become the laughing stock of the EU.”